Michael Lesniak, Aquatech: “The future and independence of all countries are underpinned by water”
Taiwan’s billionaire investments in climate change adaptation aim to future-proof the island’s water-intensive semiconductor industry by tapping into unconventional water sources. We explore this enlightening example to address the water crisis through proper and timely action.
Michael Lesniak's journey in the water sector spans nearly four decades, characterized by a relentless pursuit of innovation and environmental stewardship. His career commenced as a college intern at the Pennsylvania Department of Environmental Resources, moving afterwards to Nalco in Chicago, at the time a small company specialized in solving difficult industrial water problems. His tenure at Nalco witnessed his ascent to executive roles and international work, especially after the merger with Ecolab, a deal which in he played a key role and was responsible for merging the global field sales and service teams all over the world.
After retiring from Nalco in 2022, Lesniak became a Senior Advisor to the UN CEO Water Mandate, advocating for global water resilience. Last year he joined Aquatech International as Vice President of Partnerships, where he focuses on building close relationships with customers to help scale the company into emerging sectors. In this interview, he discusses Taiwan’s investments in unconventional water sources, the impact on its economy, and the role of private companies in solving global water challenges.
Earlier this year Taiwan’s government approved a $13 billion investment in climate change adaptation for the next four years, including the development of unconventional water sources. Can you comment on what it will mean for the economy of Taiwan, and the global semiconductor industry?
Taiwan is a relatively small island nation that punches way above its weight when it comes to making semiconductors. They pioneered the idea of silicon “foundries”. When I think foundry, I think of some of my early customers who would melt steel, bronze, or some other metal and pour it onto molds that their customers would send to them, that was my understanding of a foundry. The foundry did not develop the product or even build the final product. The foundry had to be really cost-competitive at melting metal and pouring it into the molds of their customers, since the lowest cost shop won the business. The high cost shops went bankrupt. If a shop decided to compete with their customers, it would usually not end well for the shop.
One of the challenges of making silicon chips is that the foundries consume a lot of water and generate a lot of wastewater
Taiwan got really good at making silicon chips and using the patterns of their customers; they call these silicon foundries. They never competed with their customers, so they attracted all the semiconductor designers who were making useful end products, and they grew very strong. They invested in their schools, people and supply chain to make sure they could produce the lowest cost silicon “foundry” chips at a lower cost than anyone in the world.
U.S. companies tried to do everything themselves and differentiate themselves with “value” and usually higher cost; they have struggled to compete with Taiwan both on a cost basis and in the usefulness of the end products for mobile phones, cloud computing data centres, and artificial intelligence applications that demand low cost and low energy use. The foundry model won out, and Taiwan enjoys a very high global market share of semiconductors today. Taiwanese people have invested two generations in semiconductor manufacturing and there is tremendous national pride; they broke away from mainland China rule in 1949 and semiconductor manufacturing has provided a good life for them.
One of the challenges of making silicon chips is that it consumes a lot of water and generates a lot of wastewater. Further complicating things, the newer smaller chips are much more complicated, with many more steps that use much more water, and produce much more waste.
Taiwan’s public and government realize they must invest in water infrastructure if they want to dominate their microelectronic competitors
Additionally, Taiwan is feeling the impact of acute climate change on their limited water supplies. The monsoon rains do not come like they did in the past, Taiwan is hotter now and the ground and soil are not holding as much water as in the past, and their reservoirs are filling up with sediment much quicker and holding less water.
The public and government realize they must invest more in water infrastructure if they want to continue to dominate their global microelectronic competitors and be independent and not be controlled by China. They need more water supplies to achieve this, and they must reuse and recycle their water as a matter of survival. Water is a life and death resource; it is very important.
Taiwan anticipates total reuse capacity of 334,000 m3/d by 2026, as well as eight desalination plants with a total capacity of 850,000 m3/d
For Taiwan, the new announcement to invest $13 billion in water was an easy decision. They announced they are building more fabs across the country, and smaller chips, and so they need more water. Taiwan wants to survive and remain free, and thus this investment means everything to them. They have partnered closely with TSMC (their homegrown global leader in manufacturing semiconductors) and many other industries strategically connected to the semiconductor supply chain and located in their major industrial parks. They are not proposing anything new or innovative there, everything is tried and proven technology, and they are executing with precision and speed to drive low cost, something they are very good at.
Taiwan’s total package includes the seawater reverse osmosis desalination plants in Hsinchu and Tainan, 106 km of water transmission and distribution pipelines, as well as land use planning and energy supply optimisation, and municipal-to-industrial wastewater reuse in the country’s industrial parks. Taiwan’s ambition to develop unconventional water resources anticipates a total reuse capacity of 334,000 m3/d by 2026, as well as the construction of eight seawater desalination projects with a total capacity of 850,000 m3/d.
What are the enabling conditions for such a high-magnitude investment?
Since the investment is being made by the government, the enabling conditions are threefold: first, they need to have the money to pay for it, to come from tariffs, taxes, and transfers of gross domestic product revenue; second, the ruling party and leadership must have the will and public support to spend the money on water infrastructure; and lastly, the country leadership must be willing to follow the science of water to ensure quantity, quality, and access within each individual local water basin.
Taiwan leaders have the skill and will, in addition to the money, public and private support from their industrial stakeholders, and the right science. The semiconductor manufacturers obviously support the plan because they cannot survive without it.
What lessons can other jurisdictions learn from Taiwan’s ambition concerning climate adaptation?
The future and independence of all countries are underpinned by water. Without water, there is no economic future, no independence, no life. All societies can follow Taiwan’s lead and regularly invest a portion of their gross domestic product revenue and taxes, and charge citizens and companies appropriate tariffs to maintain water systems and supplies appropriately, but unfortunately, that is unlikely. Many countries have other problems like war, famine, monetary disruption, corruption, and inequality which get in the way of them making good water decisions.
Leaders in Taiwan have the skill and will, in addition to the money, public and private support, and the right science, for a $13 bn investment
Water infrastructure is typically a very large long-term CAPEX investment, and may take years to complete. The role of leadership is to foresee problems and address them before they become big problems. Singapore, United Arab Emirates, Israel, Sydney, and some cities in the U.S. like Santa Clara, or San Antonio are other good examples to learn from.
Leaders can learn that water solutions today require a robust set of solutions, and not a one size fits all. Taiwan’s plan involves strengthening fresh water supplies through desalination and reuse, strategically aligning and locating fresh water and recycled resources within their land use plan, population growth and agricultural ambitions. The plan includes investment in transmission pipelines which is brilliant because transmission is a very important part of the solution for Taiwan.
You are advising the UN CEO Water Mandate’s strategy for the Water Resilience Coalition (WRC). Can you tell us about the WRC’s approach and process?
The ambition is to achieve positive water impact in 100 global water-stressed basins that support over 3 billion people and to enable equitable and resilient water access and hygiene for over 300 million people by 2030. Four main approaches are being used to achieve the ambition and they include scaling proven solutions, advancing innovation, leveraging finance, and measuring impact.
Water infrastructure is a large long-term investment, and the role of leadership is to foresee and address problems before they become big
There are now about 45 CEOs that have made the pledge to achieve Net Positive Water Impact in water-stressed basins and agreed to develop, implement, and enable strategies for water-resilient value chains to raise the global ambition on water. The CEOs are working collectively to scale their resources and achieve their ambition in key U.S. basins like California and the Mississippi and other basins around the world where they collectively do business.
What value do private firms contribute to taking action on water issues, locally and globally?
Businesses have human, physical, and economic resources that can be catalytic and complimentary to help governments succeed if, where, and when they need help solving problems. Most citizens expect their government to provide the proper water quantity, quality, and access for their needs. We know that is not happening perfectly everywhere, especially as weather and climate disrupt plans that may have worked five or ten years ago. The CEOs in the Water Resilience Coalition offer up their resources to help governments and citizens. The actions vary from country to country, no one size that fits everywhere. Water problems are usually very complex and involve many stakeholders, so businesses need to understand their role and insert themselves when and if needed.
The main wins so far are collective actions that compound individual private sector contributions in basins through government support and ministerial participation, multi-sectorial collaboration and allocation of funds to support the implementation of improvement actions. The WRC has also established collective funding mechanisms that act as a channel towards scalability and sustainability. The funds have helped channel investments in numerous areas from natural conservation or restoration to water access, sanitation, and hygiene while strengthening water governance by bringing together relevant stakeholders - and providing sound scientific knowledge to facilitate the decision-making process.
Other key wins have been the removal of departmental barriers and to promote coordination across sectors – such as agricultural, financial, energy, planning, private and NGO actors.
Do you think businesses give enough emphasis to water-related risks? What trends do you see in corporate water sustainability?
Large public businesses that have an obvious dependency on water do a very good job of managing their water related risks. Think of large global beverage companies like Coke, Pepsi, Diageo, AB, or Nestle. These types of companies have been working on water risks from the beginning of their first business plan. They essentially put water in a container and generate profits from water. It’s pretty easy to understand. If you run out of water, you cannot make profits.
The latest trend is for all companies to look seriously at water sustainability, and to look at water use throughout the entire supply chain
The latest trend is for all companies to look more seriously at water sustainability. Most consumers are starting to realize their clothing, food, electricity, cell phone, transportation, government, education, and housing are highly dependent on water, especially young consumers who are paying close attention to sustainability. The latest trend is to look at water use throughout the entire supply chain and take ownership of making sure people have the water they need, including the poorest and most in need.
A recent study completed by Ecolab showed that across the general population, access to clean and safe water is a significant climate concern and consumers are holding governments and industries most responsible for water conservation, and they are willing to do their part to help. Consumers feel that businesses lack clarity on how to address the water crisis but believe that the crisis can be addressed with proper and immediate action. Consumers in China feel this way the strongest.
Smart governments and businesses are tuning in to this feedback from their constituents and customers, this is the new trend and the business risk that companies and governments are trying to manage.